[Federal Register Volume 88, Number 240 (Friday, December 15, 2023)]
[Notices]
[Pages 87012-87017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27528]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99132; File No. SR-CboeEDGX-2023-078]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Its Fee Schedule

December 11, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 8, 2023, Cboe EDGX Exchange, Inc. (``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 87013]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to 
amend its Fee Schedule. The text of the proposed rule change is 
provided in Exhibit 5. The text of the proposed rule change is provided 
in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule applicable to its 
equities trading platform (``EDGX Equities'') as follows: (1) by 
introducing Add Volume Tier 7; (2) by modifying the Market Quality 
Tier; (3) by introducing a new Non-Displayed Add Volume Tier; (4) by 
modifying Remove Volume Tier 3; and (5) by introducing a new Retail 
Volume Tier. The Exchange proposes to implement these changes effective 
December 1, 2023.\3\
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    \3\ The Exchange initially filed the proposed fee change on 
December 1, 2023 (SR-CboeEDGX-2023-074). On December 8, 2023, the 
Exchange withdrew that filing and submitted SR-CboeEDGX-2023-077. On 
December 8, 2023, the Exchange withdrew that filing and submitted 
this proposal.
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    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of 16 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues 
that do not have similar self-regulatory responsibilities under the 
Securities Exchange Act of 1934 (the ``Act''), to which market 
participants may direct their order flow. Based on publicly available 
information,\4\ no single registered equities exchange has more than 
14% of the market share. Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. The Exchange in 
particular operates a ``Maker-Taker'' model whereby it pays rebates to 
members that add liquidity and assesses fees to those that remove 
liquidity. The Exchange's Fee Schedule sets forth the standard rebates 
and rates applied per share for orders that provide and remove 
liquidity, respectively. Currently, for orders in securities priced at 
or above $1.00, the Exchange provides a standard rebate of $0.00160 per 
share for orders that add liquidity and assesses a fee of $0.0030 per 
share for orders that remove liquidity.\5\ For orders in securities 
priced below $1.00, the Exchange provides a standard rebate of $0.00009 
per share for orders that add liquidity and assesses a fee of 0.30% of 
the total dollar value for orders that remove liquidity.\6\ 
Additionally, in response to the competitive environment, the Exchange 
also offers tiered pricing which provides Members opportunities to 
qualify for higher rebates or reduced fees where certain volume 
criteria and thresholds are met. Tiered pricing provides an incremental 
incentive for Members to strive for higher tier levels, which provides 
increasingly higher benefits or discounts for satisfying increasingly 
more stringent criteria.
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    \4\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (November 28, 2023), available at https://www.cboe.com/us/equities/market_statistics/.
    \5\ See EDGX Equities Fee Schedule, Standard Rates.
    \6\ Id.
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Add Volume & Market Quality Tiers
    Under footnote 1 of the Fee Schedule, the Exchange currently offers 
various Add/Remove Volume Tiers. In particular, the Exchange offers six 
Add Volume Tiers that each provide an enhanced rebate for Members' 
qualifying orders yielding fee codes B,\7\ V,\8\ Y,\9\ 3,\10\ and 
4,\11\ where a Member reaches certain add volume-based criteria.\12\ 
First, the Exchange is proposing to introduce a new Add Volume Tier 7 
to provide Members an additional manner in which they could receive an 
enhanced rebate if certain criteria is met. The proposed criteria for 
proposed Add Volume Tier 7 is as follows:
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    \7\ Fee code B is appended to orders adding liquidity to EDGX in 
Tape B securities.
    \8\ Fee code V is appended to orders adding liquidity to EDGX in 
Tape A securities.
    \9\ Fee code Y is appended to orders adding liquidity to EDGX in 
Tape C securities.
    \10\ Fee code 3 is appended to orders adding liquidity to EDGX 
in the pre and post market in Tapes A or C securities.
    \11\ Fee code 4 is appended to orders adding liquidity to EDGX 
in the pre and post market in Tape B securities.
    \12\ The Exchange notes that unless otherwise noted on the fee 
schedule, enhanced rebates or reduced fees offered under footnote 1 
are only available to securities priced at or above $1.00.
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    <bullet> Add Volume Tier 7 provides a rebate of $0.0034 per share 
for securities priced at or above $1.00 to qualifying orders (i.e., 
orders yielding fee B, V, Y, 3, or 4) where: (1) Member has a total 
remove ADV \13\ >=0.40% of the TCV \14\ or Member has a total remove 
ADV >=40,000,000; and (2) Member has a Hidden, Primary Peg ADV \15\ 
>=1,000,000; and (3) Member has a Hidden Midpoint ADV (i.e., yielding 
fee codes DM \16\ or MM \17\) >=5,000,000.
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    \13\ ``ADV'' means average daily volume calculated as the number 
of shares added to, removed from, or routed by, the Exchange, or any 
combination or subset thereof, per day. ADV is calculated on a 
monthly basis.
    \14\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
    \15\ The Exchange notes that it also proposes to add a 
definition for Hidden, Primary Peg ADV to the Definitions section of 
the fee schedule, ``Hidden, Primary Peg ADV'' means ADV in non-
displayed orders that include a Primary Peg instruction as defined 
in EDGX Equities Rule 11.6(j)(2).
    \16\ Fee code DM is appended to orders adding liquidity to EDGX 
using MidPoint Discretionary order within discretionary range.
    \17\ Fee code MM is appended to non-displayed orders adding 
liquidity to EDGX using Mid-Point Peg.
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    Second, the Exchange proposes to modify the criteria of the 
existing Market Quality Tier. Currently, the criteria for the Market 
Quality Tier is as follows:
    <bullet> The Market Quality Tier provides a rebate of $0.0028 per 
share for securities priced at or above $1.00 to qualifying orders 
(i.e., orders yielding fee B, V, Y, 3, or 4) where: (1) Member adds an 
ADV >=0.25% of the TCV; and (2) Member adds an ADV >=0.10% of the TCV 
as

[[Page 87014]]

Non-Displayed orders that yield fee codes DM, HA,\18\ HI,\19\ MM or 
RP.\20\
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    \18\ Fee code HA is appended to non-displayed orders adding 
liquidity to EDGX.
    \19\ Fee code HI is appended to non-displayed orders adding 
liquidity to EDGX that receive price improvement.
    \20\ Fee code RP is appended to non-displayed orders adding 
liquidity to EDGX using Supplemental Peg.
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    Now, the Exchange proposes to amend the second prong of criteria in 
the Market Quality Tier. The proposed criteria is as follows:
    <bullet> The Market Quality Tier provides a rebate of $0.0028 per 
share for securities priced at or above $1.00 to qualifying orders 
(i.e., orders yielding fee B, V, Y, 3, or 4) where: (1) Member adds an 
ADV >=0.25% of the TCV; and (2) Members adds an ADV >=0.12% of the TCV 
as Non-Displayed orders that yield fee codes DM, HA, HI, MM or RP.
Non-Displayed Add Volume Tiers
    In addition to the Add/Remove Volume Tiers offered under footnote 
1, the Exchange also offers three Non-Displayed Add Volume Tiers that 
each provide an enhanced rebate for Members' qualifying orders yielding 
fee codes DM, HA, MM, and RP, where a Member reaches certain volume-
based criteria offered in each tier. The Exchange now proposes to 
introduce Non-Displayed Add Volume Tier 4. The proposed criteria for 
Non-Displayed Add Volume Tier 4 is as follows:
    <bullet> Non-Displayed Add Volume Tier 4 provides a rebate of 
$0.0025 per share for securities priced at or above $1.00 to qualifying 
orders (i.e., orders yielding fee DM, HA, MM, or RP) where: (1) Member 
has a total remove ADV >=0.40% of the TCV or Member has a total remove 
ADV >=40,000,000; and (2) Member has a Hidden, Primary Peg ADV 
>=1,000,000; and (3) Member has a Hidden Midpoint ADV (i.e., yielding 
fee codes DM or MM) >=5,000,000.
    The Exchange also proposes to make minor grammatical changes to the 
introductory text associated with the Non-Displayed Add Volume Tiers. 
These changes are non-substantive in nature.
Remove Volume Tiers
    In addition to the Add/Remove Volume Tiers and Non-Displayed Add 
Volume Tiers offered under footnote 1, the Exchange also offers three 
Remove Volume Tiers that each assess a reduced fee for Members' 
qualifying orders yielding fee codes BB,\21\ N,\22\ and W \23\ where a 
Member reaches certain add volume-based criteria. The Exchange now 
proposes to amend Remove Volume Tier 3. Currently, the criteria for 
Remove Volume Tier 3 is as follows:
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    \21\ Fee code BB is appended to orders that remove liquidity 
from EDGX in Tape B securities.
    \22\ Fee code N is appended to orders that remove liquidity from 
EDGX in Tape C securities.
    \23\ Fee code W is appended to orders that remove liquidity from 
EDGX in Tape A securities.
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    <bullet> Remove Volume Tier 3 provides a reduced fee of $0.00275 
per share for securities priced at or above $1.00 to qualifying orders 
(i.e., orders yielding fee codes BB, N, or W) and a reduced fee of 
0.28% of total dollar value for securities priced below $1.00 where: 
(1) Member has an ADAV >=0.30% of the TCV; and (2) Member has a total 
remove ADV >=0.40% of the TCV; and (3) Member adds Retail Pre Market 
Order ADV (i.e., yielding fee code ZO) >=3,000,000.
    Now, the Exchange proposes to amend the second prong of criteria in 
Remove Volume Tier 3. The proposed criteria is as follows:
    <bullet> Proposed Remove Volume Tier 3 provides a reduced fee of 
$0.00275 per share for securities priced at or above $1.00 to 
qualifying orders (i.e., orders yielding fee codes BB, N, or W) and a 
reduced fee of 0.28% of total dollar value for securities priced below 
$1.00 where: (1) Member has an ADAV >=0.30% of the TCV; and (2) Member 
has a total remove ADV >=0.40% of the TCV or Member has a total remove 
ADV >=40,000,000; and (3) Member adds Retail Pre Market Order ADV 
(i.e., yielding fee code ZO) >=3,000,000.
Retail Volume Tiers
    Pursuant to footnote 2 of the Fee Schedule, the Exchange offers 
Retail Volume Tiers which provide Retail Member Organizations 
(``RMOs'') \24\ an opportunity to receive an enhanced rebate from the 
standard rebate for Retail Orders \25\ that add liquidity (i.e., 
yielding fee code ZA or ZO). Currently, the Retail Volume Tiers offer 
two Retail Volume Tiers where a Member is eligible for an enhanced 
rebate for qualifying orders (i.e., yielding fee code ZA or ZO) meeting 
certain add volume-based criteria. The Exchange now proposes to 
introduce Retail Volume Tier 3. The proposed criteria for Retail Volume 
Tier 3 is as follows:
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    \24\ See EDGX Rule 11.21(a)(1). A ``Retail Member Organization'' 
or ``RMO'' is a Member (or a division thereof) that has been 
approved by the Exchange under this Rule to submit Retail Orders.
    \25\ See EDGX Rule 11.21(a)(2). A ``Retail Order'' is an agency 
or riskless principal order that meets the criteria of FINRA Rule 
5320.03 that originates from a natural person and is submitted to 
the Exchange by a Retail Member Organization, provided that no 
change is made to the terms of the order with respect to price or 
side of market and the order does not originate from a trading 
algorithm or any other computerized methodology.
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    <bullet> Proposed Retail Volume Tier 3 provides an enhanced rebate 
of $0.0037 per share for securities priced above $1.00 to qualifying 
orders (i.e., orders yielding fee ZA or ZO) where: (1) Member has a 
total remove ADV >=0.40% of the TCV or Member has a total remove ADV 
>=40,000,000; and (2) Member has a Hidden, Primary Peg ADV >=1,000,000; 
and (3) Member has a Hidden Midpoint ADV (i.e., yielding fee codes DM 
or MM) >=5,000,000.
    Together, the proposed addition of Retail Volume Tier 3, proposed 
addition of Add Volume Tier 7, proposed amendment to the Market Quality 
Tier, proposed addition of Non-Displayed Add Volume Tier 4, and 
proposed amendment to Remove Volume Tier 3 are each intended to provide 
Members an alternative opportunity to earn an enhanced rebate or a 
reduced fee by increasing their order flow to the Exchange, which 
further contributes to a deeper, more liquid market and provides even 
more execution opportunities for active market participants. 
Incentivizing an increase in liquidity adding or removing volume, 
through enhanced rebate or reduced fee opportunities, encourages 
liquidity adding Members on the Exchange to contribute to a deeper, 
more liquid market, and liquidity executing Members on the Exchange to 
increase transactions and take execution opportunities provided by such 
increased liquidity, together providing for overall enhanced price 
discovery and price improvement opportunities on the Exchange. As such, 
increased overall order flow benefits all Members by contributing 
towards a robust and well-balanced market ecosystem.
    The Exchange also proposes to make minor grammatical changes to the 
introductory text associated with the Retail Volume Tiers. These 
changes are non-substantive in nature.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\26\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \27\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and

[[Page 87015]]

practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \28\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \29\ 
as it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities.
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    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
    \28\ Id.
    \29\ 15 U.S.C. 78f(b)(4).
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    As described above, the Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. The Exchange believes that 
its proposal to: (1) introduce new Add Volume Tier 7; (2) modify the 
Market Quality Tier; (3) introduce new Non-Displayed Add Volume Tier 4; 
(4) modify Remove Volume Tier 3; and (5) introduce new Retail Volume 
Tier 3 reflects a competitive pricing structure designed to incentivize 
market participants to direct their order flow to the Exchange, which 
the Exchange believes would enhance market quality to the benefit of 
all Members. Specifically, the Exchange's proposal to introduce 
slightly more difficult criteria to its Market Quality Tier and Remove 
Volume Tier is not a significant departure from existing criteria, is 
reasonably correlated to the enhanced rebate or reduced fee offered by 
the Exchange and other competing exchanges,\30\ and will continue to 
incentivize Members to submit order flow to the Exchange. Additionally, 
the Exchange notes that relative volume-based incentives and discounts 
have been widely adopted by exchanges,\31\ including the Exchange,\32\ 
and are reasonable, equitable and non-discriminatory because they are 
open to all Members on an equal basis and provide additional benefits 
or discounts that are reasonably related to (i) the value to an 
exchange's market quality and (ii) associated higher levels of market 
activity, such as higher levels of liquidity provision and/or growth 
patterns. Competing equity exchanges offer similar tiered pricing 
structures, including schedules of rebates and fees that apply based 
upon members achieving certain volume and/or growth thresholds, as well 
as assess similar fees or rebates for similar types of orders, to that 
of the Exchange. Further, the Exchange believes that its proposal to 
incentivize Hidden, Primary Peg ADV \33\ and Hidden Midpoint ADV \34\ 
will encourage Members to submit additional non-displayed orders to the 
Exchange using pegged order types. The Exchange believes that non-
displayed, Primary Peg \35\ orders will reduce the number of cancel/
replace messages submitted by Members to the Exchange and non-displayed 
MidPoint Peg \36\ orders will encourage greater liquidity with the 
potential for price improvement on the Exchange.
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    \30\ See MIAX Pearl Equities Exchange Fee Schedule, Remove 
Volume Tier, available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Pearl_Equities_Fee_Schedule_12012023.pdf See also MEMX Equities 
Fee Schedule, Liquidity Removal Tier, available at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/.
    \31\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove 
Volume Tiers.
    \32\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
    \33\ Supra note 15.
    \34\ Supra notes 16-17.
    \35\ See EDGX Equities Rule 11.6(j)(2). A ``Primary Peg'' order 
is an order with instructions to peg to the NBB, for a buy order, or 
the NBO, for a sell order.
    \36\ See EDGX Equities Rule 11.8(d). A MidPoint Peg Order is a 
non-displayed Market Order or Limit Order with an instruction to 
execute at the midpoint of the NBBO, or, alternatively, pegged to 
the less aggressive of the midpoint of the NBBO or one minimum price 
variation inside the same side of the NBBO as the order.
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    In particular, the Exchange believes its proposal to: (1) introduce 
new Add Volume Tier 7; (2) modify the Market Quality Tier; (3) 
introduce new Non-Displayed Add Volume Tier 4; (4) modify Remove Volume 
Tier 3; and (5) introduce new Retail Volume Tier 3 is reasonable 
because the revised tiers will be available to all Members and provide 
all Members with an additional opportunity to receive an enhanced 
rebate or a reduced fee. The Exchange further believes the proposed 
modifications to its Add Volume Tier, Non-Displayed Add Volume Tier, 
and Retail Volume Tier will provide a reasonable means to encourage 
liquidity adding displayed orders and liquidity adding non-displayed 
orders, respectively, in Members' order flow to the Exchange and to 
incentivize Members to continue to provide liquidity adding volume to 
the Exchange by offering them an additional opportunity to receive an 
enhanced rebate or reduced fee on qualifying orders. Further, the 
Exchange wishes to encourage the use of the Primary Peg and MidPoint 
Peg order types by introducing criteria specific to Hidden, Primary Peg 
ADV and Hidden Midpoint ADV. While the proposed criteria in the Market 
Quality Tier and Remove Volume Tier 3 are slightly more difficult than 
the current criteria found in those tiers, the proposed criteria is not 
a significant departure from existing criteria, is reasonably 
correlated to the enhanced rebate or reduced fee offered by the 
Exchange, and will continue to incentivize Members to submit order flow 
to the Exchange. An overall increase in activity would deepen the 
Exchange's liquidity pool, offers additional cost savings, support the 
quality of price discovery, promote market transparency and improve 
market quality, for all investors.
    The Exchange believes that the proposed changes to its Add/Remove 
Volume Tiers, Market Quality Tier, Non-Displayed Add Volume Tier, and 
Retail Volume Tier are reasonable as they do not represent a 
significant departure from the criteria currently offered in the Fee 
Schedule. The Exchange also believes that the proposal represents an 
equitable allocation of fees and rebates and is not unfairly 
discriminatory because all Members will be eligible for the proposed 
new tiers and have the opportunity to meet the tiers' criteria and 
receive the corresponding enhanced rebate if such criteria is met. 
Without having a view of activity on other markets and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would definitely result in any Members qualifying the new 
proposed tiers. While the Exchange has no way of predicting with 
certainty how the proposed changes will impact Member activity, based 
on the prior months volume, the Exchange anticipates that at least one 
Member will be able to satisfy proposed Add Volume Tier 7, at least two 
Members will be able to satisfy the proposed Market Quality Tier, at 
least one Member will be able to satisfy proposed Non-Displayed Add 
Volume Tier 4, at least one Member will be able to satisfy proposed 
Remove Volume Tier 3, and at least 1 Member will be able to satisfy 
proposed Retail Volume Tier 3. The Exchange also notes that proposed 
changes will not adversely impact any Member's ability to qualify for 
enhanced rebates offered under other tiers. Should a Member not meet 
the proposed new criteria, the

[[Page 87016]]

Member will merely not receive that corresponding enhanced rebate.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Rather, as discussed above, 
the Exchange believes that the proposed changes would encourage the 
submission of additional order flow to a public exchange, thereby 
promoting market depth, execution incentives and enhanced execution 
opportunities, as well as price discovery and transparency for all 
Members. As a result, the Exchange believes that the proposed changes 
further the Commission's goal in adopting Regulation NMS of fostering 
competition among orders, which promotes ``more efficient pricing of 
individual stocks for all types of orders, large and small.''
    The Exchange believes the proposed rule changes do not impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the proposed 
changes to the Exchange's Add/Remove Volume Tiers, Market Quality Tier, 
Non-Displayed Add Volume Tier, and Retail Volume Tier will apply to all 
Members equally in that all Members are eligible for each of the Tiers, 
have a reasonable opportunity to meet the Tiers' criteria and will 
receive the enhanced rebate on their qualifying orders if such criteria 
is met. The Exchange does not believe the proposed changes burden 
competition, but rather, enhances competition as it is intended to 
increase the competitiveness of EDGX by amending an existing pricing 
incentive and adopting pricing incentives in order to attract order 
flow and incentivize participants to increase their participation on 
the Exchange, providing for additional execution opportunities for 
market participants and improved price transparency. Greater overall 
order flow, trading opportunities, and pricing transparency benefits 
all market participants on the Exchange by enhancing market quality and 
continuing to encourage Members to send orders, thereby contributing 
towards a robust and well-balanced market ecosystem.
    Next, the Exchange believes the proposed rule changes does not 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As previously 
discussed, the Exchange operates in a highly competitive market. 
Members have numerous alternative venues that they may participate on 
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the 
Exchange represents a small percentage of the overall market. Based on 
publicly available information, no single equities exchange has more 
than 14% of the market share.\37\ Therefore, no exchange possesses 
significant pricing power in the execution of order flow. Indeed, 
participants can readily choose to send their orders to other exchange 
and off-exchange venues if they deem fee levels at those other venues 
to be more favorable. Moreover, the Commission has repeatedly expressed 
its preference for competition over regulatory intervention in 
determining prices, products, and services in the securities markets. 
Specifically, in Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and, 
also, recognized that current regulation of the market system ``has 
been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \38\ The fact that this market is competitive has also 
long been recognized by the courts. In NetCoalition v. Securities and 
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one 
disputes that competition for order flow is `fierce.' . . . As the SEC 
explained, `[i]n the U.S. national market system, buyers and sellers of 
securities, and the broker-dealers that act as their order-routing 
agents, have a wide range of choices of where to route orders for 
execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers' . . . .''.\39\ Accordingly, the Exchange does not believe its 
proposed fee change imposes any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
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    \37\ Supra note 3.
    \38\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \39\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \40\ and paragraph (f) of Rule 19b-4 \41\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \40\ 15 U.S.C. 78s(b)(3)(A).
    \41\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#7200071e175f111d1f1f171c0601320117115c151d04"><span class="__cf_email__" data-cfemail="245651484109474b4949414a5057645741470a434b52">[email protected]</span></a>. Please include 
file number SR-CboeEDGX-2023-078 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-CboeEDGX-2023-078. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the

[[Page 87017]]

Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of the filing also will be available for inspection and 
copying at the principal office of the Exchange. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to file number SR-CboeEDGX-2023-078 and should be 
submitted on or before January 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
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    \42\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27528 Filed 12-14-23; 8:45 am]
BILLING CODE 8011-01-P


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